We'll be ready for MTD for VAT, will you?
Our product and engineering teams have been hard at work liaising with HMRC to bring you the best possible accounting software solution for the Making Tax Digital (MTD) era. We can now confirm that FreeAgent will be supporting MTD for VAT in time for the April 2019 start date. 🎉
When should you switch to MTD-compliant software?
All VAT-registered businesses with income above the VAT threshold that are not exempt from MTD, must comply with the MTD rules for VAT submissions by 1st April 2019. In short, this means that they’ll need to store their accounting records and submit their VAT returns to HMRC using MTD-compliant software by that date.
However, the best time to make the switch to MTD-compliant software might be a lot sooner than you think, especially if your accounting year doesn’t match the tax year.
Businesses with a 1st April to 31st March accounting year
If your business’s accounting year is set to end on the last day of March 2019, and your VAT quarters end on the last day of March, June, September and December, you’ll need to be ready to hit the ground running with MTD-compliant software from the 1st April 2019. Any transactions taking place on or after that date will be included in your first MTD VAT submission.
Businesses with a different accounting year
If your business’s accounting year ends on a different date (e.g. 30th June), you might want to think about switching to an MTD-compliant software provider as soon as you can. If you start your next accounting year without a solution in place, you will have no option but to switch accounting systems part-way through an accounting year – which can be an incredibly arduous task!
The table below illustrates the problem you might end up facing if the MTD for VAT start date (1st April 2019) occurs part-way through your business’s accounting year.
|Date||Business 1 (accounting year end on 31st March)||Business 2 (accounting year end on 30th June)|
|Apr 18||Accounting year 2018/19||Accounting year 2017/18|
|Jul 18||Accounting year 2018/19 spans the MTD for VAT start date. If you don’t switch to MTD-compliant software before this accounting year begins, you may face having to switch accounting systems part-way through an accounting year.|
|Apr 19 – MTD for VAT begins||Accounting year 2019/20 begins on the same date that you must start using MTD-compliant software. The business's full year’s accounting records will be on the same system.|
Can’t I just keep submitting my VAT returns through HMRC’s website?
Using a basic spreadsheet to store your records and manually entering and/or tweaking your submissions in HMRC’s website will no longer be an option from 1st April 2019. If you’re doing something similar to this at the moment, you need to start looking for an MTD-compliant alternative.
Take part in the MTD for VAT beta test with FreeAgent
A public beta test for MTD for VAT is rolling out this coming tax year and anyone who is VAT registered can take part. FreeAgent is working closely with HMRC to take part in this beta as soon as possible, but we need some volunteers to help us test the software!
If you’d like to take part, please get in touch at firstname.lastname@example.org.
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